P6. Income taxes

Tax items recognized in comprehensive income

Tax items recognized in comprehensive income were distributed as follows.

SEK in millions

Jan–Dec 2016

Jan–Dec 2015

Tax items recognized in net income

   

Current tax

-1,057

-1,189

Adjustment of current tax related to prior years

-1

-6

Deferred tax

-54

1

Total tax expense recognized in net income

-1,113

-1,194

Tax items recognized in other comprehensive income

   

Current tax

-29

6

Deferred tax

28

-136

Total tax recognized in other comprehensive income

-1

-130

Pre-tax income was SEK 11,479 million in 2016 and SEK 12,879 million in 2015. The difference between the nominal Swedish income tax rate and the effective tax rate comprise the following components.

Percent

Jan–Dec 2016

Jan–Dec 2015

Swedish income tax rate

22.0

22.0

Underprovided or overprovided current tax expense in prior years

0.0

0.1

Non-deductible expenses

29.8

0.8

Tax-exempt income

-42.1

-13.6

Effective tax rate in net income

9.7

9.3

Non-deductible expenses consist mainly of the provision for settlement amount proposed by US and Dutch authorities. In 2016 and 2015, tax-exempt income consisted primarily of dividends from subsidiaries.

Deferred tax assets and liabilities

Deferred tax assets and liabilities changed as follows.

SEK in millions

Jan–Dec 2016

Jan–Dec 2015

Deferred tax assets

   

Carrying value, opening balance

0

125

Change recognized in comprehensive income

-54

1

Reclassification from current tax

0

Offset tax liabilities/assets

54

-126

Carrying value, closing balance

0

0

Deferred tax liabilities

   

Carrying value, opening balance

10

Change recognized in comprehensive income

-28

136

Offset tax assets/liabilities

54

-126

Carrying value, closing balance

36

10

Temporary differences in deferred tax assets and liabilities were as follows.

SEK in millions

Jan–Dec 2016

Jan–Dec 2015

Deferred tax assets

   

Delayed expenses for provisions

101

126

Offset deferred tax liabilities/assets

-101

-126

Total deferred tax assets

Deferred tax liabilities

   

Fair value adjustments, cash-flow hedges and assets available-for-sale

137

136

Offset deferred tax assets/liabilities

-101

-126

Total deferred tax liabilities

36

10

Net deferred tax assets (+) / liabilities (-)

-36

-10

In 2016 and 2015, there were no accumulated non-expiring tax loss carry-forwards or unrecognized deferred tax assets. As of December 31, 2016 and 2015, the unrecognized deferred tax liability in untaxed reserves amounted to SEK 1,933 million and SEK 2,787 million, respectively.

Untaxed reserves and appropriations

As of December 31, 2016 and 2015, untaxed reserves in the balance sheet consisted of profit equalization reserves totaling SEK 8,786 million and SEK 12,666 million, respectively.

SEK in millions

Jan–Dec 2016

Jan–Dec 2015

Change in profit equalization reserves

3,880

-1,190

Group contributions received

8,297

16,395

Group contributions paid

-609

-8,829

Net effect on income

11,567

6,376